Can an employer that has both union and non-union employees allow all to join one plan?

[Guest Why]

As an employer one of our plants has a union group that currently numbers around 40 employees. Their contract states that if enough employees express an interest in a 401K plan, that we will establish a 401K plan for them. As of yet, no one has expressed any interest in a 401K plan.

However, we would like to know if it's feasible to open up our current 401K plan to these employees. None of these employees have ever been included in the testing of this plan, and I really don't expect much participation by them, if any.

I'm interested to know how opening this up would affect our testing, costs, etc. Since no one has come forward yet, should we just leave it alone until someone does? If they do, then what? We are trying to simplify/standardize as much as we can; and rather than have 2 401K plans, we were seeing if it's feasible to have only the one.

thanks

WHY

[Tom Poje]

union ees are always tested separately from non union employees, so it wouldn't have any effect on your testing non union employees if you were to bring the union people into the plan. they have to pass their own ADP test.

There is no ACP test as that is deemed to automatically pass (1.401(m)-1(a)(3))

Not sure what else might effect things. I believe if the plan is top heavy you would have to provide top heavy minimums.

[mbozek]

Since these people are coverd by a union you will need to get the permisson of the union to cover them under the plan in order to modify the collective bargaining agreement.

[Guest Why]

Thanks folks. I was told this was pension question paradise! Keep up the good work!

[david rigby]

Perhaps this is overkill, but I wonder if you already have a 410(b) issue. Read carefully IRC 410(b)(3)(A). Just because a union exists does not mean you get to ignore those employees.